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mrs_skeptik [129]
2 years ago
9

SIROM Scientific Solutions has $10 million of outstanding equity and $5 million of bank debt. The bank debt costs 5% per year. T

he estimated equity beta is 2. If the market risk premium is 9% and the risk-free rate is 3%, compute the weighted average cost of capital if the firm’s tax rate is 30%.
Business
1 answer:
Maru [420]2 years ago
6 0

Answer:

15.167%

Explanation:

For computing the WACC we need to do the following calculations which are shown below:

Cost of equity = Risk free rate + Beta × Market risk premium  

= 3% + 2 × 9%

= 21%  

After tax cost of debt = Cost of debt ×  (1-Tax Rate)

= 5% × (1 - 0.30)

= 3.50%

Now

WACC = Weight of debt ×  Cost of debt + Weight of equity × Cost of equity

= 5 ÷ 15 × 3.50 + 10 ÷ 15 × 21

= 1.167% + 14%

= 15.167%

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JDS Foods’ projected benefit obligation, accumulated benefit obligation, and plan assets were $65 million, $55 million, and $37
Kitty [74]

Answer:

a) $28 Million

b) -$24 Million

Explanation:

The first part of the question is to determine the pension liability tht should be reported in the balance sheet

To do this, we use the following formula

Projected Benefit Obligation - The Plan Assets

= $65 million - $37 Million = $28 Million

Part B) This part says to dettermine the amount JDS would report if the planned asset increase to $89 million

The formula Projected Benefit Obligation - The Plan Assets  still should be used but there is a difference as follows

$65 million - $89 Million = -$24 Million

6 0
3 years ago
A survey by the National Restaurant Association found that 70% of consumers say that they are more likely to visit restaurants t
LekaFEV [45]
To determine the number of consumers which might prefer eating locally produced food, we simply multiply the metropolitan population by the decimal equivalent of the percentage given. That is,
                            = (1,773,120)(0.70) 
                            = 1,241,184
Thus, 1,241,184 will most likely prefer the locally produced food. 
3 0
3 years ago
*A product cost is Group of answer choices expensed in the period in which the product is manufactured shown with current liabil
inn [45]

Answer:

expensed in the period in which the product is manufactured.

Explanation:

A product can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks etc.

Manufacturing costs can be defined as the overall costs associated with the acquisition of resources such as materials and the cost of converting these raw materials into finished goods. Manufacturing costs include direct labor costs, direct materials cost and manufacturing overhead costs.

Generally, a product cost or the cost associated with the manufacturing of a particular product is expensed within the period in which it was manufactured by the firm.

3 0
2 years ago
Which of the following dimensions of entrepreneurial orientation is described as a forward-looking perspective characteristic of
trapecia [35]

Answer:

A) Proactiveness.

Explanation:

This explained to be a conceptual development in entrepreneurial orientation that enacts a degree of anticipation in product and also increase a productivity in the entrepreneurial sphere. Some undiluted descriptions shows it to be the introduction of results based on its qualitative study, which is been aimed at the characterizing of the proactiveness in entrepreneurial software firms. Experienced researched organizations has shown that the one which are related to environment monitoring and opportunities quest been highlighted are also core part of proactiveness.

4 0
3 years ago
an owner can lease her building for $150,000 per year for three years. the explicit cost of maintaining the building is $50,000,
Charra [1.4K]

The present value of the stream of accounting profit is $262,431.6044 and The present value of the stream of economic profit is $91,851.0616.

<h3>Present value</h3>

a. The present value of the stream of accounting profit:

Present value=($150,000-$50,000)/1.07 +($150,000-$50,000)/ (1.07)² +($150,000-$50,000)/(1.07)³

Present value=($100,000)/1.07 +($100,000)/ (1.07)² +($100,000)/(1.07)³

Present value=$93,457.9439+$87,343.8728+$81,629.7877

Present value=$262,431.6044

b. The present value of the stream of economic profit:

Present value=($150,000-$50,000-$65,000)/1.07 +($150,000-$50,000-$65,000)/ (1.07)² +($150,000-$50,000-$65,000)/(1.07)³

Present value=($35,000)/1.07 +($35,000)/ (1.07)² +($35,000)/(1.07)³

Present value=$32,710.2804+$30,570.3555+$28,570.4257

Present value=$91,851.0616

Therefore the present value of the stream of accounting profit is $262,431.6044 and The present value of the stream of economic profit is $91,851.0616.

Learn more about present value here:brainly.com/question/20813161

brainly.com/question/15904086

#SPJ1

The complete question is:

an owner can lease her building for $150,000 per year for three years. the explicit cost of maintaining the building is $50,000, and the implicit cost is $65,000. all revenues are received, and costs borne, at the end of each year. if the interest rate is 7 percent, determine the present value of the stream of:

a. The present value of the stream of accounting profit.

b. The present value of the stream of economic profit.

3 0
1 year ago
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